by Calculated Risk on 4/17/2009 03:30:00 PM

From MarketWatch: Pessimistic scenario gains stress-test influence

Banks ... are under pressure to disclose the results of their stress tests to shareholders. Banks are expected to sign capital-assistance documents upon the completion of the stress tests, explaining whether they are seeking out immediate government capital infusions or they plan to spend six months raising capital before re-evaluating.

The signing of those documents could be a material agreement, which means banks must file an 8-K with the Securities and Exchange Commission, explaining what they've agreed to.

"It's a material event," said Gary Roth, partner at Alston & Bird LLP in New York. "When banks are given their results, they would be under a lot of pressure to disclose. When one discloses, it puts pressure on the other banks to disclose."

SEC officials are in discussions with bank regulators about disclosure responsibilities.

If the stress test shows a bank needs additional capital, (update for clarification) and the bank signs the agreement, there is no question that is a material event and must be disclosed to shareholders. Also, it appears everyone now understands the "more adverse" scenario is the baseline:

Alston & Bird's [Jeffrey] Hare said he believes that bank regulators are now using the pessimistic scenario as their baseline forecast.